States need to distinguish between rich and poor farmers: CEA Arvind Subramanian

New Delhi: Joining the debate on taxing agriculture income, Chief Economic Adviser Arvind Subramanian today said states, which have the option to levy the tax, should make a distinction between rich and poor farmers.

Representational image. AFP

"The legal situation is...nothing prevents state governments from taxing agriculture income. The constitutional restriction is on central government taxing agriculture
income.

"There too, one could make a case that this is a choice open to 29 state governments and if there are willing takers, all power to them," he said.

Subramanian also stressed that there is a need to make a clear distinction between poor and rich farmer.

"Why is it that it is very difficult to make a distinction between a poor farmer and a rich farmer... When you say farmer, people think that you are going after the poor farmer.

"So what is it about political discourse that does not allow these distinctions to be made. Why can't we say, rich regardless of where they get their income, should be taxed," he said.

A controversy erupted after NITI Aayog member Bibek Debroy suggested that the agricultural income should be taxed.

However, Finance Minister Arun Jaitley later clarified that there was no such proposal and the Centre has no power to impose tax on agricultural income.